- New Energy Solar (NEW) will sell a stake in its Mount Signal 2 solar power plant in California’s Imperial Valley to US Solar Fund
- Under the agreement, US Solar Fund will pay US$23 million (approximately A$30 million) for a 25 per cent interest in the plant and has the option to purchase a further 25 per cent within 12 months for a similar sum
- New Energy Solar CEO John Martin said the deal would enable the company to reduce its gearing and lighten the weight of the asset in the company’s portfolio
- It comes at a time New Energy Solar is looking to sell its Australian assets and focus on its U.S. operations, and an important feature of this agreement is that the company will continue to operate the Californian plant
- Shares have been trading 0.6 per cent higher at 86 cents
New Energy Solar (NEW) will sell a stake in its Mount Signal 2 solar power plant in California’s Imperial Valley to US Solar Fund.
Under the agreement, US Solar Fund will pay US$23 million (approximately A$30 million) for a 25 per cent interest in the plant and has the option to purchase a further 25 per cent within 12 months for a similar sum.
If US Solar Fund exercises the option, it will pay US$22 million (approximately A$28.6 million), give or take US$1 million (approximately A$1.3 million), subject to a performance-based adjustment.
In June, New Energy Solar told shareholders it had lined up NextPowerIII as a potential buyer for Mount Signal 2.
However, the two parties were unable to agree on the terms of the agreement and as such, when the exclusivity period lapsed the company began considering other proposals.
CEO John Martin said the proposal from US Solar Fund was superior and that New Energy Solar is looking forward to beginning the new partnership.
“We set out to sell 50 per cent of Mount Signal 2 this year to reduce NEW’s gearing, confirm Mount Signal 2’s net asset value and to reduce the weighting of the 200MWDC Mount Signal 2 in NEW’s portfolio,” John commented.
“Mount Signal 2 is a substantial and well-situated project with a 20-year power purchase agreement (PPA) with Southern California Edison. In light of the decision to sell NEW’s Australian assets and focus on the U.S. market, selling a smaller initial portion of the equity in Mount Signal 2 this year is an outcome that suits NEW’s positioning as it will maintain management of the asset,” he added.
New Solar Energy expects to receive indicative offers for its Australian assets, Beryl and Manildra in the first quarter of 2021.
Shares have been trading 0.6 per cent higher at 86 cents at 10:14 am AEDT.